Fears or concerns surrounding Chinese investment in Canada should be viewed through the lens of Canadian national interest and the benefits and costs of foreign investment to our economy, says Dany Assaf in The National Conversation on Asia

Are Fears of Chinese Investment in Canada Overblown?

September 14, 2012

The National Conversation on Asia, an initiative of the Asia Pacific Foundation of Canada, asks experts from business and academia: “Are fears of Chinese investment in Canada overblown?”

Dany Assaf: Fears or concerns surrounding Chinese investment in Canada should be viewed through the lens of Canadian national interest and the benefits and costs of foreign investment to our economy generally. The starting point of analysis is the reality that Canadians benefit from having others investing their capital in our country. This global capital can help us fund projects, expand our businesses more quickly and cost efficiently than we could on our own.

The reasons for this are simple: 34 million people have access to a lot less capital than almost 7 billion people globally. If we could only rely on seeking investment capital from one another, the laws of supply and demand would dictate that our cost of capital would be much higher than for our global competitors with access to greater capital. This would further handicap the Canadian economy and its competitiveness and only make things worse for all of us. This math is hard to overcome. As a result, Canadians need to maintain an open foreign investment system strictly for our own national interest. Accordingly, there is no logic in turning down or fearing investment capital from any particular country as a matter of principle. This is especially so in a world where wealth and capital have accumulated in new places - such as China- and will continue to do so for the coming century.

The question then becomes how we get the most from our investment partners.

This means it also is perfectly acceptable for a strong and prosperous country, with attractive assets like Canada, to insist on ensuring that significant foreign investments offer specific and tangible benefits to the Canadian economy. The art of remaining open to vital foreign investment and maximizing the benefits is in having clear foreign investment rules that provide the process certainty and encourage the right kinds of investment. In the true Canadian tradition, the operating principle should be that, we generally don’t care where you come from or your background, if you come to invest here, act like a partner in the Canadian economy, and follow the rules your investment is welcome. If not, then this may not be the right place for you to invest.  

Read the full article here.

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